9911796707
TMI Blog1998 (9) TMI 611X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of cement and the sale of bag containing the cement are mentioned separately with the respective prices of the two articles being shown to have been charged separately. 2.. The petitioner seeks to challenge the assessment order for the period 1995-96 (annexure 3) passed by the Deputy Commissioner of Commercial Taxes, Hazaribagh under section 17(2)(a) of the Act. From the impugned order it appears that in the return filed by the petitioner the amount of the gross turnover was shown at Rs. 5,84,51,212.86 with the following break up: Rs. Stock transfer 1,08,66,019.41 Sale price taxable at 11 per cent 4,44,26,853.45 Sale price taxable at 7 per cent 31,58,340.00 5,84,51,212.86 The Deputy Commissioner accepted the figures returned by the petitioner but questioned the amount of Rs. 31,58,340 as being shown separately to be taxed at the lower rate of 7 per cent. The relevant part of the order translated into English, would read as follows: In connection with the sale of cement the dealer has shown the sale of packing materials separately in its bills on which sales tax has been realised at the rate of 7 per cent and paid (to the department) at the same rate. This appears to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that section 6-C simply clarified and explained that the factors that went into fixing the price of the goods could not be treated separately from the goods themselves and that no account was in fact taken of the packing material when the transaction took place, and that if such account must be taken then the same rate must be applied to the packing material as is applicable to the goods themselves. 6.. What, however, appears to me to be the ratio of the decision and what, in fact is of importance for our present purpose is that the question concerning the nature and ingredients of a sale would almost always be a question of fact to be decided on the facts and circumstances of each case. It will be useful to reproduce here paragraph 7 of the judgment which is as follows (page 384 of STC) 7. It is commonly accepted that a transaction of sale may consist of a sale of the product and a separate sale of the container housing the product with respective sale considerations for the product and the container separately; or it may consist of a sale of the product and a sale of the container but both sales being conceived of as integrated components of a single sale transaction; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contents may imply that there was no intention to sell the packing, but where any packing material is of significant value it may imply an intention to sell the packing material. In a case where the packing material is an independent commodity and the packing material as well as the contents are sold independently, the packing material is liable to tax on its own footing. Whether a transaction for sale of packing material is an independent transaction will depend upon several factors, some of them being: 1.. The packing material is a commodity having its own identity and is separately classified in the Schedule; 2.. There is no change, chemical or physical, in the packing either at the time of packing or at the time of using the content; 3.. The packing is capable of being reused after the contents have been consumed; 4.. The packing is used for convenience of transport and the quantity of the goods as such is not dependent on packing; 5.. The mere fact that the consideration for the packing is merged with the consideration for the product would not make the sale of packing an integrated part of the sale of the product. (emphasis added) 7.. Having thus stated the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our notice by Mrs. I.S. Choudhary, S.C.I. appearing for the Revenue. She first cited before us the Supreme Court decision in Vasavadatta Cements v. State of Karnataka [1996] 101 STC 168; [1996] 2 SCC 88. In Vasavadatta Cements v. State of Karnataka [1996] 101 STC 168 the Supreme Court dealt with the matter, as in this case, of the supply of cement packed either in gunny bags or in plastic bags. The controversy concerning the rate of tax leviable on the packing material for cement arose as a result of the introduction of sub-section (3-D) in section 5 of the Karnataka Sales Tax Act, 1957. Sub-section (3-D) of section 5, which brought the packing material within the purview of the Act and made it exigible to tax was as follows: (3-D) Notwithstanding anything contained in this Act, where goods sold or purchased are contained in containers or are packed in any packing materials liable to tax under this Act, the rate of tax and the point of levy applicable to turnover of such containers or packing materials as the case may be, shall whether the containers or the packing materials have already been subjected to tax under this Act or not or whether the price of the containers or of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng anything contained in sub-section (1) or subsection (2), but subject to sub-section (6), where goods sold are contained in containers or are packed in any packing materials, the rate of tax and the point of levy applicable to such containers or packing materials, as the case may be, shall, whether the price of the containers or the packing materials is charged separately or not, be the same as those applicable to goods contained or packed, and in determining turnover of the goods, the turnover in respect of the containers or packing materials shall be included therein. (6) Where the sale or purchases of goods contained in any containers or packed in any packing materials is exempt from tax, then, the sale or purchase of such containers or packing materials shall also be exempt from tax. 13.. It is further significant to note that in Premier Breweries v. State of Kerala [1998] 108 STC 598 (SC) the dealer relied on the two earlier decisions in Raj Sheel v. State of Andhra Pradesh [1989] 74 STC 379 (SC) and Vasavadatta Cements v. State of Karnataka [1996] 101 STC 168 (SC). The larger Bench in Premier Breweries v. State of Kerala [1998] 108 STC 598 (SC) took the view that the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 996] 101 STC 168 (SC): 19. We are of the view that in Vasavadatta s case [1996] 101 STC 168; [1996] 2 SCC 88 this Court overlooked the marked dissimilarity between section 6-C of the Andhra Act and section 5(3-D) of the Karnataka Sales Tax Act. We are also of the view that sub-sections (5) and (6) of the Kerala General Sales Tax Act will have to be construed uninfluenced by the decision of this Court in Raj Sheel s case [1989] 74 STC 379 where Pathak, C.J., construed the deeming provisions in section 6-C of the Andhra Act in a narrow sense. Section 6-C did not contain any specific provisions for including the turnover of the containers of the packing materials in the turnover of the goods. There were also no specific provisions in the Andhra Act to levy tax on the packing materials and the containers at the rate applicable to the goods even in a case where the price of the containers or the packing materials were charged separately. We are also of the view that the mere fact that the containers and the goods were sold separately or charged separately will not make any difference in the matter of computation of the turnover of the goods and determination of tax or the rate of tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y transferred without consideration depending upon the contract between the parties. (ii) Vasavadatta Cements v. State of Karnataka [1996] 101 STC 168 (SC) followed Raj Sheel case [1989] 74 STC 379 proceeding on the premise, held to be incorrect in the later decision, that the provisions contained in section 5(3-D) of the Karnataka Act was similar and comparable to section 6-C of the Andhra Act. (iii) In Premier Breweries v. State of Kerala [1998] 108 STC 598 (SC) it was held that the relevant provisions in the Karnataka and the Kerala Acts were quite dissimilar to the provision in the Andhra Act and section 5(5) of the Kerala Act was required to be interpreted uninfluenced by the decision in Raj Sheel v. State of Andhra Pradesh [1989] 74 STC 379 (SC) where the provision of section 6-C of the Andhra Act was given a restricted and narrow meaning. On an interpretation of sub-sections (5) and (6) of section 5 of the Kerala Act it was held that in calculating the turnover of the goods, the turnover of the packing materials will have to be included and the entire turnover will be subjected to tax at the rate payable for the packed goods ; it will make no difference if the packing ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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